Chaper Seven - Segmentation, Targeting & Positioning
Steps in the Marketing Process
1. Segmentation - Identify and describe market segments 2. Targeting Evaluate segments and decide which to go after 3. Positioning . Design a product or service to meet a segment's needs and develop a marketing mix that will create a competitive advantage in the minds of the selected market target
Segmentation
Process that divides the market into subsets of customers who behave in the same way, have similar needs, or similar characteristics that relate to purchase behaviour Many different dimensions, or segmentation variables, that marketers can utilise
Segmenting Consumer Markets
Demographics
Psychographics
Behavior
Family life cyc
Ethnicity Place of residence (geography)
Age and Generational Marketing Generation X (born between 1965 and 1978) : Has entrepreneurial reputation, views home as an expression of individuality o Baby-boomers (born between 1946 and 1964) Key segment due to their size and earnings, willing to invest money, time, and energy to maintain youthful image . Mature consumers : Focus on lifestyle factors, such as mobility Family Life cycle . Family needs and expenditures change over time : As families move through stages, different product categories ascend or descend in importance Even if importance is constant, needs within category may change Segmenting B2B Markets
o Helps B2B companies understand needs and characteristics of potential customers - Firms can be categorised based on: Organisational demographics : Production technologies used : User status
Targeting
Marketers evaluate each potential segment and decide upon which groups of customers they will invest marketing resources : Selected groups are known as target markets Phases of Targeting : Evaluate Market Segments . Develop Segment Profiles : Choose a Targeting Strategy
Evaluating Viability of Market Segments
: A viable target segment should satisfy these requirements: . Measurability (be measurable in size and purchasing power) o Accessibility (be reachable by marketing communications & distribution) o Substantialness (be large enough to be profitable) o Durability (stability of segment) - Differential responsiveness (have members with similar wants and needs that are different from those in other segments to justify differentiation)
Develop Segment Profiles
After segments are identified, marketers should develop profiles or descriptions of the typical customers within a segment - Segment profiles might include geographic, location, lifestyle and product- usage characteristics
Choosing a Targeting Strategy
: Undifferentiated marketing . Appeals to a broad spectrum of people - Efficient due to economies of scale . Effective when a broad base of consumers have similar needs . e.g. Walmart
Targeting Strategies
Segments
Strategy 1
Firm
Strategy 1
Strategy 1
* Differentiated marketing - Develops one or more products for each of several customer groups with different product needs Appropriate when consumers are choosing among well-known brands with distinctive images and it is possible to identify one or more segments with distinct needs for different types of products o e.g, L'Oreal (Elseve, L'Oreal, Lancome) Targeting Segments Strategies
Strategy 1
Firm
Strategy 2
Strategy 3
Concentrated marketing - Entails focusing efforts on offering one or more produ